ATP Oil seeks deepwater auction, bonds hold in; Lucent stronger; Kellwood boosted by sale talk

By Stephanie N. Rotondo

Phoenix, Jan. 22 - A distressed debt trader said it was "kind of a busy day" on Wednesday, as earnings were churning out.

U.S. Airways put out numbers early in the day that topped analysts' expectations. A trader said he had thought that the earnings could "filter down" into AMR Corp. paper, given the ongoing merger talks with U.S. Air. However, that did not occur, which the trader said was likely due to investors being restricted in AMR securities.

Away from earnings stories, ATP Oil & Gas Corp.'s were holding in as the company filed to auction off certain deepwater properties. The company had previously asked the court to approve an auction for certain shallow-water drilling areas.

Alcatel-Lucent USA Inc. was meantime continuing to rise as the company looks to complete a previously reported loan deal.

ATP stays steady

ATP Oil & Gas' 11 7/8% notes due 2015 were trading in the "same ZIP code" of 7 bid, 8 offered, according to a trader.

Another trader said the issue was active in the 7 to 7¼ context.

The company has asked the court overseeing its bankruptcy case to approve an auction of certain deepwater properties. Earlier this month, the company had also sought to auction off certain shallow-water drilling areas in the Gulf of Mexico.

The company thinks the deepwater properties hold reserves totaling as much as $6 billion.

ATP is a Houston-based oil and gas exploration company.

Lucent remains firm

A trader saw Alcatel-Lucent's 6.45% notes due 2029 moving higher on the day, ending around 79.

The bonds have been inching up on the back of a new loan deal that the Paris-based telecommunications services and equipment company is currently shopping.

On Tuesday, the company upsized its U.S. six-year term loan to $1.75 billion from $1.275 billion and its euro six-year term loan to €300 million from €250 million, according to a market source.

Pricing on the U.S. loan was also reduced to Libor plus 625 basis points from Libor plus 700 bps, while pricing on the euro loan was cut to Euribor plus 650 bps from Euribor plus 700 bps, the source said.

And, the original issue discount on the two loans was tightened to 99 from 98.

Both term loans still have a 1.25% floor.

The company's credit facility also includes a $500 million 31/2-year term loan that was reverse flexed to Libor plus 525 bps from Libor plus 600 bps, the source continued.

The discount on the 31/2-year loan was also moved to 99 from 98, while the 1.25% Libor floor was left unchanged.

Credit Suisse Securities (USA) LLC and Goldman Sachs & Co. are leading the covenant-light credit facility.

Proceeds will be used to refinance existing debt and for general corporate purposes.

Kellwood rises on sale rumors

Kellwood Co.'s 7 5/8% notes due 2017 traded up 3 points, a trader reported.

He pegged the notes around 63.

The trader remarked that there is talk that Sun Capital Partners - the private equity group that owns the Chesterfield, Mo.-based clothing designer and manufacturer - is looking to sell the business.

Broad market mixed

Among other distressed issues, a trader said Edison Mission Energy's bonds were "a little bit weaker," trading around 51.

But another trader deemed the debt unchanged at 51 bid, 52 offered.

The second trader also saw Clear Channel Communications Inc.'s 10¾% and 11% notes due 2016 rising to trade "north of 80."

Nortel Networks Corp.'s 10¾% notes due 2016 were meantime softer, trading in a range of 116½ to 117.

Sara Rosenberg contributed to this article

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